Australia may spend up to $6.6 billion to offset coronavirus’ hit to its economy

An Australia Dollar note is seen in this illustration photo, June 1, 2017. (Reuters)

Australia’s fiscal stimulus package to protect the economy against the impact of the coronavirus may run as high A$10 billion ($6.6 billion).

The Sunday Telegraph newspaper reported that the package was likely to be $5 billion while broadcaster Sky News said the stimulus could be up to twice this amount. Australia is expected to reveal details of its plans on Tuesday, when Prime Minister Scott Morrison and his Cabinet meet.

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Governments around the world have already pledged more than $54 billion in budget support to counter the virus’s impact. Morrison has yet to put a figure on his plan, which he has said will be “targeted, measured and scalable, with an emphasis on protecting business cash flow and jobs.”

Initial estimates of the coronavirus’s impact from the nation’s Treasury and central bank suggest the economy is likely to suffer a quarterly contraction for the first time in nine years. For Australia, the blow is coming hot on the heels of a summer of devastating wildfires that were already expected to crimp growth.

While the country had only reported 74 confirmed cases of the virus as of Sunday, including three deaths, its economy is particularly exposed to China, the center of the outbreak. China is Australia’s key market for commodity exports and a vital source of tourists and students for the services sector.

The Australian Financial Review reported the package may feature tax breaks to spur emergency investment by big businesses while the Australian newspaper said stimulus could include cash payments to households.

The Sunday Telegraph report said the government was looking at wage subsidies and payments for small businesses. It also said the government may encourage pensioners to spend more by lowering the amount they are allowed to earn from financial assets before receiving government assistance.

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Last Update: Wednesday, 20 May 2020 KSA 14:06 - GMT 11:06
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